It's a real pain in the neck, but disputing faulty credit reports is often worth it. ThinkStock/iStockphoto

February 25, 2013

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Cleaning up your credit reportDisputing errors on your credit report can be a hassle, said Alex Veiga of The Associated Press, but it's worth it. Free copies of your credit report are available once a year from the big three firms — Experian, TransUnion, and Equifax — via AnnualCreditReport.com. If you find a mistake, you can file a dispute online or by mail with the credit bureau, which is required to investigate and reply within 30 days. If you're not getting anywhere, don't be tempted by so-called credit repair firms, which "can't do anything that you couldn't do yourself." Instead, try the Consumer Financial Protection Bureau — a new federal agency that regulates the credit bureaus and can help consumers who have problems with credit reports, credit monitoring, and complaints about debts.

A guide to responsible spending "Living within one's means is the bedrock of financial stability," said Lisa Scherzer at Yahoo. Being unable to cover bare necessities is an obvious red flag, but there are other warning signs that you're spending too much. First, figure out how long you could survive without a job. The gold standard is to have enough cash stashed away for at least six months, factoring in regular living expenses and emergencies. Keep tabs on how much you're saving — if it's less than 10 percent of your pay, it's not enough. And if you're over 35, "you should tuck away more than that." Credit card balances are another good indicator: "Simply holding your own (where your balance remains the same) is a good sign you're living beyond your means."

Face up to debt collectorsQuit dodging debt collectors and deal with them, said Karen Blumenthal in TheWall Street Journal. "The best way for borrowers to handle a debt they can't pay is to talk with the lender as soon as possible." When collectors call, pick up the phone and try to work out a plan to keep payments current. Keep detailed records — meticulousness can pay off if a collector decides to sue. If you're being hounded for a debt that might not be yours, dispute it right away; "you have a 50-50 chance they won't be able to provide any proof under the law," said consumer debt lawyer Hans Thomas. If the case goes to court, hire an attorney and show up — the last thing you want is a court judgment, which debt holders can use to garnish wages and bank accounts.